R MacCulloch
Robert MacCulloch is a native of New Zealand. Robert worked at the Reserve Bank of NZ, before he travelled to the UK to complete a PhD in Economics at Oxford University.
The primary reason on the economic front that National was elected was to reduce the cost of living. How is it doing? The Nats are trumpeting the fall in inflation, which has nothing to do with tweaking the Reserve Bank Act. As for the party's tax-cuts, they do nothing to reduce the cost of anything. Those cuts simply put a bit more money in your pocket, but, since they are financed by borrowing, money will be taken back out of your pocket due to higher interest rates. The best way National could reduce costs is to increase competition.
However, its not-so-secret adviser and think tank, the NZ Initiative, whose former staffer, Matt Burgess, is the prime minister’s economic adviser, is going out of its way to support monopoly power where ever it can find it. Its executive chair, Oliver Hartwich, has come out supporting a merger between Foodstuffs North and South Island. “The grocery sector, in particular, benefits from economies of scale in procurement, distribution and technology investment,” he says. Why cry tears for the grocery duopoly? Why the concern about ‘benefiting’ it even more? As for the view customers would gain by doing so, why would a predatory monopoly pass benefits of a merger onto us and not the franchise owners? Given Foodstuff’s chief sits on the Initiative board (and that organization pays the Initiative a heap of money in membership fees), nothing it says on such matters can be taken seriously.
Meanwhile, on banking policy, Initiative board chair Roger Partridge has come out supporting cuts in capital requirements of Kiwi banks. What that would mean is next time a banking crisis hits, the cost would be shunted onto taxpayers. It’s a pro-big bank, anti-consumer, position. Even ardent free-market supporters like John Cochrane, formerly of Chicago, now Stanford University, says in the Wall Street Journal, “The More Bank Capital, the Safer the Bank. We need buffers to protect taxpayers and the financial system.” Why quote him? Since he’s presented to the Initiative so it should know better. Partridge writes, “The consequences of high capital ratios deterring lending are of concern enough ... It is not just bank customers who suffer. So, too, does the economy as a whole.” Partridge is a lawyer; Cochrane a famous banking and finance economist. Again, given a former ANZ Bank chair sits on the Initiative Board (as well as ANZ being a paid-up member), its hardly surprising.
It doesn’t stop there. The Initiative’s staffers are all for not protecting the property rights of those of us who innovate to create news stories. They don’t think internet giants should pay for using the news that we locals have made. They’ve critiqued National for proposing a law that would require big internet firms to pay for news content. They argue Google does us all a favor with its news reporting. How ironic to say so when last week the US justice system moved against the internet behemoths. A US federal judge has just ruled Google acted illegally to maintain a monopoly in a landmark decision that strikes at the power of tech giants. Judge Mehta ruled that “Google had abused a monopoly over the search business.” The Justice Department had sued Google, accusing it of illegally cementing its dominance. “Google is a monopolist, and it has acted as one to maintain its monopoly,” Judge Mehta said in his ruling. Google is, of course, also a member of the Initiative, paying it a big fat membership fee.
All of which begs a question. Is National on course to be a pro-business, pro-monopolist government, or will it change its colors to become a pro-consumer, pro-small business one? National better not screw up on this front, since, if it does, Kiwi industry won’t know what will hit them in a few years time. Should the Nats become associated in the public mind with defending unpleasant, wealth-redistributing and not wealth-creating capitalists, then Labour will be returned to power and implement capital taxes to take that illicit wealth back away from them. The Nats should be choosing their friends more carefully.
https://www.wsj.com/articles/SB10001424052702304911104576444482440753132
This article was originally published by Down to Earth Kiwi.
